Portugal, the best place

Portugal,the best place

PORTUGUESE MINT AND OFFICIAL PRINTING OFFICE

Index 1. Executive Summary

2. Our world todayKey market trends and the impact of the Covid-19 pandemic

3. Definitions

4. Where are we today? A snapshot of the ecosystemStartups & scaleupsEnablersPolicy, regulation & incentivesTalentKnowledgeCorporationsCapital

5. KPIs at a glance

6. How do we compare to Spain, Israel and Singapore?

7. The voice of the founders

8. The wisdom of the crowds

9. Emerging trends

10. Now what?

11. Portugal is a Digital Nation

12. Sponsors panel

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Foreword by Portugal’s Secretary of State for the Digital Transition

André Aragão de AzevedoSecretary of State for the Digital Transition

The role of entrepreneurship as an accelerator of the digital transition and a source of innovation for our economy is unavoidable.

We are aware of the importance of this sector as a source of new, more competitive companies, based on digital business models and qualified human resources.

The ecosystem of startups and scaleups is particularly resilient, agile, and e�ective in adapting to adverse conjunctures, like the one we go through, thus having the ability to operate on an economic countercycle.

Entrepreneurship can be the catalyst for a faster economic recovery and for a structural change in the European economic model that makes it globally more competitive.

Our vision for the ecosystem is clear and not restricted to our country. The Portuguese presidency of the Council of the European Union aims to mark a new cycle for the European entrepreneurial ecosystem, based on a greater capacity for retention and attraction of startups, talent and investment.

We need a better knowledge of the ecosystem at national and European level, for the benefit of public policy decisions based on objective information.

That's why this study is so important. We can't manage what we don't know.

Welcome to the final edition of the “Startup & Entrepreneurial Ecosystem Report, Portugal 2021”!

The purpose of this study is to provide a comprehensive and in-depth view of the Portuguese startup and entrepreneurial ecosystem. It provides a detailed view of where we are today, who are the major players, what are the key KPI, how Portugal compares with other nations. It is also the voice of entrepreneurs that chose Portugal as the best place to start-up.

In addition to the number of startups and information about policies, regulation, public incentives, capital, talent, corporations, and key enablers of the ecosystem, this report analyzes key emerging trends, challenges, opportunities, and what is next for the Portuguese ecosystem.

This report was developed based on existing IDC research, public data, a survey carried out among more than one hundred startups founders, and more than 30 in-depth interviews with key ecosystem’s stakeholders.

Based on the data and insights provided in this report, we can say Portugal is today one of the nations with the greatest potential for attracting and developing startups and scaleups. There are several aspects related to the ecosystem that can and should be improved, but the growth we have seen in the number of startups, unicorns, existing capital, and talent in the last 5 years has been impressive.

If we add other contextual factors - such as the fact that Portugal is considered the country with the best quality of life in the world, the second friendliest country for foreign investment, and the third safest country worldwide, with one of the best communication’s infrastructure in Europe - Portugal is probably one of the best places to startup!

Foreword by IDC

Gabriel CoimbraGroup Vice President and Country Manager, IDC

Ecosystem

Talent

Knowledge

Enablers

Policy,Regulation &

Incentives

Capital

StartupsScaleups

Corporations

Universities

R&D

Infrastructure

Incubators/ Accelerators

Quality of Life

Regulation

Incentives

CorporateVenture Capital

BusinessAngels

PublicCapital

VentureCapital

InnovationCatalysts

Partnerships

Customers

Local

Attracted

A hexagon is the shape that best fills a plane with

equal size units and leaves no wasted space.

Hexagonal packing also minimizes the perimeter

for a given area because of its 120-degree angles.

Based on the data and insights provided in this report, we can say Portugal is today one of the nations with the greatest potential for attracting and developing startups and scaleups. There are several aspects related to the ecosystem that can and should be improved, but the growth we have seen in the number of startups, unicorns, existing capital, and talent in the last 5 years has been impressive.

If we add other contextual factors - such as the fact that Portugal is considered the country with the best quality of life in the world, the second friendliest country for foreign investment, and the third safest country worldwide, with one of the best communication’s infrastructure in Europe - Portugal is probably one of the best places to startup!

Our world today Key market trends

& impact of pandemic

Our world today

TECHNOLOGICALIncreased advantage of real-time data and insightsExpansion of simulators, digital twin, online learningEnhanced roles for 3D printing, robots, and drones

ENVIRONMENTALMassive COVID-19 pandemicEnergy industry disruptionGlobal food supply disruption

LEGALAgreements and contracts in limboChained failures, force majeuresChanging risk and liabilities posture

BUSINESSSupply chain disruption, new business and operating modelsSea change in customer expectations, more online, more automationHybrid remote/virtual and safe work mandates

With the accelerating pace of changes,

business and technology leaders need to be

prepared for disruptions and opportunities.

Source: IDC - Critical External Drivers Shaping Global IT and Business Planning, 2021

The pandemic changes everything

POLITICALInstability, unrest, misinformationLoss of faith and trust in institutions and leadersIncrease in nationalism, closed borders, trade wars, shifting alliances

ECONOMICRecession, massive unemployment, bankruptciesCollapse of demand and supply Resource substitution (technology versus people)

SOCIALDivisiveness, politicization, uneven impact to further split societiesCyberthreatsIncreasing virtual world and social networks

Our world today

2021 critical drivers

ECONOMIC SITUATION

BUSINESS FOCUS

business continuity

covid crisis

economic slow down

recession return to growth

the next normal

cost optimization

business resiliency

targetedinvestments

future enterprise

flatten the curve

DISTRIBUTE

DEVELO

P

PL

AN

Scale digital distribution

& monetization

Radically speed & scale development

Tie to enterprise strategy

& ops Leverage external digital

resources

SOURCEThe pandemic has redefined disruption. Survival of the fittest is linked not to size or strength but to resilience and the ability to change — to move quickly, adapt, seize opportunities, and be ready for the next disruption.

ACCELERATED DISRUPTION Crisis, Resilience, and Opportunity

In the post-COVID-19 economy, expected changes in behavior, consumption and supply will force companies to adopt digital-led business and operating models that can survive lockdowns, movement restrictions, social distancing, supply disruptions, and more.

THE NEXT NORMAL Resilient Business and Operating Models


2021 Critical Drivers

INTEGRATION & ORCHESTRATION MANAGEMENT

DEVELOPER SERVICES



Our world todayOur world today

PHYSICAL

DIGITAL

COLLABORATIVE BUSINESS MODELS

SHARED DATA

& INSIGHT

SHARED OPERATIONS

SHARED APPLICATIONS

Understanding and provisioning the platforms that will sustain, advance, and scale business and operations and exert strategic control are essential for every business. A digital platform is the assembly of technologies, capabilities, and data upon which digitally enabled businesses run. The data exchanges, intelligence, and network e�ect within digital ecosystems generate new value beyond the platform itself.

DIGITAL PLATFORM Ecosystems at Scale

The real-time continuum of applications and data that stretches from edge to network and core, from IoT, mobile devices, and more — combined with historical data, enterprise systems, and global information — continually “sense” an environment and put it into new contexts. AI and machine learning “compute” and spread intelligence to turn data into “action” and action into value.

INTELLIGENCE EVERYWHERE Data Drives Action

INTELLIGENT CORE

analytics

data lake

data base

data streams

AI/ML

decision support & automation

Our world todayOur world todayOur world today

The COVID-19 pandemic has focused on what customers care about and shifted how consumers and brands engage and interact. Companies with the best price, the coolest product, or the most memorable marketing campaign will not necessarily have an advantage when compared with companies that provide a safe, secure, and seamless experience.

CUSTOMER ENGAGEMENT REDEFINED Safe, Secure, and Sustainable Digital Experience

The COVID-19 disruption has exposed, accelerated, and introduced new threats to organizations and their assets, increasing noise and dissonance and eroding trust among partners and customers. Meeting expectations of trust and social responsibility become new competitive advantages where “trust = value.”

CRISIS OF TRUST Meeting Rising Expectations

cont

extu

al aw

areness

customer

conversations

satisfaction experience

journeysDATA

frictionless engagem

ent

sentiment mea

sure

men

t active learning

PREDICTABLE COMMUNICATION

MUTUAL TRUSTMUTUAL TRUST

LIFETIME VALUE

APPLIEDINTELLIGENCE



Our world todayOur world todayOur world today

Technologies are rapidly changing who or what — and where or how — work is being done. The 21st century economy requires workers to operate as agile, dynamic, and reconfigurable teams that can quickly adapt to business demands and new market requirements. Organizations need to rethink their relationship with workers and the creation and retention of skills to meet this demand.

WORK TRANSFORMATION Redefining Teams, Skills, and Leadership

Amid social distancing and working from home, access to technology and digital connectivity have become critical. People are learning to socialize, shop, educate, work, and collaborate di�erently and expect a rich, seamless, and interoperable experience, regardless of where people and data are located. But the digital divide — the gap between those who do or do not have access to technology and the skills to use it — becomes more consequential in people’s ability to complete everyday tasks.

DIGITAL DIVIDE The Imperative of Connectivity



Our world todayOur world todayOur world todayOur world today

Impact on the startup ecosystem

There are now over 500 "unicorns" (scaleups valued at $1 billion or more) globally and Europe is home to over two hundred of them.1 These unicorns are at the forefront of disrupting financial services, creating solutions to combat climate change, and automating healthcare professionals' workflows. 1

The startup and scaleup economy is worth nearly $3 trillion worldwide.

As the pandemic crisis hit across the world, startups have found themselves being hit hard by two main shockwaves: capital shock and demand.

Every crisis creates opportunities, and this crisis is no di�erent. Over half of Fortune 500 companies started during a contraction, and over 50 unicorns were created during the Great Recession.

The current crisis has accelerated the digitization of the o�ine economy. Tech Economy will be crucial for recovery.

Opportunities are unlocked for companies, they are also unlocked for ecosystems.

This is also a unique opportunity for all of us to rebuild our economic communities with a lower negative impact on the environment and a stronger focus on inclusion and fair access to the amazing value that tech ecosystems create.6

According to a study conducted in Portugal about 42.3% of the surveyed startups said that the pandemic generated new opportunities.7

Globally, 4 out of 10 startups have three months or less of liquidity (runway), and therefore, may not survive.2

Venture capital has fallen by about 20% since the beginning of the COVID-19 crisis in December 2019.3

About 72% of startups saw their revenue drop since the beginning of the crisis, with the average startup experiencing a decline of 32%.4

A study conducted in Portugal found that startups confirm that COVID-19 impacted their activity, mainly due to a decrease in sales and a postponement or delay of projects.5

1 Source: Purpose-Driven Start-Ups, Scale-Ups, and COVID-19, IDC 20204, 6 Source: Startup Genome, The Global Startup Ecosystem Report, 20202, 3, 5, 7 Source: The Impact Of Covid-19 In The National Startups Ecosystem, Startup Portugal, EY, SAP, 2020

DefinitionsIt’s important to start by determining what some of the concepts in this report refer to, as there are many commonly accepted definitions, used loosely, and most of the time they do not match each other.

This e�ect also leads to the fact that, when comparing data, numbers often refer to di�erent concepts, depending on the source

Definitions

A STARTUP ECOSYSTEM is a set of interconnected entrepreneurial actors (both potential and existing), entrepreneurial organizations (e.g., firms, venture capitalists, business angels, and banks), institutions (incubators and accelerators, universities, public sector agencies, and financial bodies), and entrepreneurial processes which formally and informally coalesce to connect, mediate and govern the performance within the local entrepreneurial or startup community environment.

A Startup ecosystem produces Startups, which evolve naturally according to the steps below before turning into a “regular or mainstream” company.

Startup

A startup is a young company or project, launched by a group of entrepreneurs to create, develop, and/or validate a scalable and repeatable economic model, typically in the form of an innovative product and business model and/or a new market segment. Given its nature and associated uncertainty and risk profile, a specific management framework is usually used to optimise an unfavourable risk-reward ratio, seeking to maximize success probabilities and attain exponential growth through the use of technology.

The following stage in the life of a startup is the scaleup status, after having achieved the elusive product-market fit and with recognizable traction. It is usually defined as a development-stage business, that is growing its market access, revenue, and its number of employees. As with any capital-intensive company, the financing goal for a scaleup is to reward its shareholders, by being acquired either via an M&A, via an IPO or shelling out significant dividends as it becomes profitable.

STARTUP

SCALEUP

Companies that have developed a product or service but have not yet achieved breakeven and are still in the process of refining their product/o�ering and finding their market fit. Companies at this stage typically incur a higher level of cost. They may also begin to generate income, if not profit. They usually receive investments (from their own resources or external funders). There is standard interaction with the tax authorities, including applicable indirect taxes, payroll taxes, and loss relief. Some jurisdictions o�er small companies simplified the tax systems based on turnover rather than profit. Selling equity stakes implies capital gains taxation for investors, whilst funding this lesser-risk, more mature growth.

Startup stages

STARTUPS are also commonly defined as being in di�erent stages, which reflect di�erent immediate goals and require di�erent incentives, capital and risk management.

PRE-SEED Companies that are formally set up or are in the process of doing so, but are at a very early stage in development. They typically start by researching, assessing or developing an initial idea or concept before reaching the formal start up process and launching an MVP (Minimum Viable Product). Companies at this stage typically incur cost only and do not generate revenues, though most receive an investment (from own resources or external funders). There is minimal need for interaction with the tax authority, aside from loss relief and payroll taxes. Selling equity stakes implies capital gains taxation for investors, whilst funding this high-risk, early growth.

EARLY STAGE AND SEED

Companies with the scope to scale up and internationalise their activities, having found significant and scalable traction. Companies at this stage may be liable for personal or corporate income taxes on profits, as well as indirect and payroll taxes. Selling equity stakes implies capital gains taxation for investors, whilst funding this much lower risk, mature growth. Additionally traditional funding methods such as loans and venture debt become available, as revenues stabilize.

GROWTH/SCALEUP

Definitions

Capital

CAPITAL is a key ingredient in the ecosystem, as it allowsdi�erent actors to invest and develop the business, generating a multiplier e�ect. Capital is defined as a lot more than strictly money, as startups often lack some of the skills required to develop (business management, sales, manage for scale, access to people and markets, …)

As Startups traverse their own life cycle, capital requirements change and di�erent entities play key roles at each stage.

PRE-SEED AND SEED EARLY STAGE GROWTH/SCALEUP

governmental funding agencies and/or financial player. Public VCs can contribute decisively to close the funding gap of startups in di�erent moments. At the very early stage, as private investors usually tend to avoid projects with a high level risk and uncertainty. And at a later stage, providing liquidity in the growth stage. They typically chose to co-invest with private capital, therefore minimizing their own risk and contributing to a win-win situation for all the involved parties.

PUBLIC VENTURE CAPITAL (PVC)

BUSINESS ANGEL (BA)

VENTURE CAPITAL (VC)

private individuals, often with a high net-worth, and usually with business experience, who directly invest part of their assets in new and growing private businesses. Business angels can invest individually or as part of a syndicate where one angel typically takes the lead role.

CORPORATE VENTURE CAPITAL (CVC) is the practice of directly investing corporate funds into external startup companies. This is usually done by large companies who wish to invest in small, but innovative, startup firms. They do so through joint venture agreements and the acquisition of equity stakes. The investing company may also provide the startup with management and marketing expertise, strategic direction, and/or a line of credit.

professional private investors, typically organized in funds, that provide capital to companies with high growth potential in exchange for an equity stake. This could amount to funding startup ventures or supporting small companies that wish to expand but do not have access to equity markets.

Definitions

Incubators and accelerators help startups succeed by providing mentorship, guidance, training, strategy, partnerships, R&D, and funding. They are instrumental in getting startups, especially early-stage ones, o� the ground. Having access to an accelerator's resources and network can make or break a startup that hasn't cemented itself within the ecosystem.

INCUBATORS Are public and private organizations that o�er structured or customized, relatively long-term, support to early-stage startups.

ACCELERATORS Are public and private organizations that provide an intense, structured short-term program to induce startups' rapid progression.

OTHER SUPPORT PROGRAMS Include all the entrepreneurial support initiatives that do not fall in the above categories. They may be short-term (usually two days to one week) programs o�ering more strategic support and include competitions, boot camps, events, seminars, and capacity-building workshops. Or they may be public support startup incentives (usually provided by public agencies) as policy measures to foster entrepreneurship.

Catalysts & enablers

Catalysts & Enablers support and help entrepreneurs and innovators succeed. They generally provide ongoing, diversified entrepreneurial support through o�ine and online activities tailored to the startups' needs. Relevant to this context are incubators, accelerators and other support programs.

PRE-SEED AND SEED EARLY STAGE GROWTH/SCALEUP

STARTUPSTAGE

ACCELERATOR

INCUBATOR

OTHER SUPPORT PROGRAMS

Definitions

COWORKING SPACES MENTORSHIP EVENTS

Other catalysts

OTHER TYPES OF CATALYSTS AND ENABLERS CAN INCLUDE:

Shared o�ces shared o�ces where startups can rent hot desks or private o�ces with no long-term commitment. Flexibility is not the only reason why startups choose to join coworking spaces. Most importantly, coworking spaces have their own communities and often organize events where entrepreneurs can expand their network and explore potential collaborations with other companies. Startups based in a coworking space often have the freelancer they need within arm's reach, and if not, there’s someone who knows someone who knows someone.

Advisory organizations and mentors can help founders during their entrepreneurial journeys in many ways. Experienced, successful mentors help you stay accountable and loyal to your vision. Their own experience in business is often critical to succed. They can help you prepare for the future and o�er unbiased opinions on critical situations.

The heart and soul of every startup ecosystem is its community of people. Its potential, knowledge, links, and skills. And people have to be brought together to form a community. Conferences, workshops, meetups, networking events, and parties are crucial to building and maintaining a startup ecosystem. Without events, no ecosystem can survive for long.

Definitions

Where are we today? A snapshot of the ecosystems

The Portuguese startup ecosystem is still young,

but it’s one of the best assets Portugal has, with small-scale

but fast-paced and steadily growing companies representing

over 1% of the country’s GDP.

Where are we today?

1% GDP12th Top 100 Emerging Ecosystem RankingStartup Genome

12th most innovative EU countryInnovation Scoreboard EU

Source: startupportugal.com/blog/tag/Government+support

The ecosystemat a glance

Where are we today?

A non-exhaustive list of companies and institutionsplaying in the Portuguese Startup Ecosystem

ZLTs

Talent

Knowledge

Enablers

Policy,Regulation &

Incentives

Capital

StartupsScaleups

Corporations

Universities

R&D

Infrastructure

Incubators/Accelerators

Qualityof Life

Regulation

Incentives

CorporateVentureCapital

BusinessAngels

PublicCapital

VentureCapital

InnovationCatalysts Partnerships

Customers

Local

Attracted

StartupsScaleups

Where are we today?

Where are we today?Startups / Scaleups

The odds of becoming a unicorn

LET’S CUT THROUGH THE CHASE. STARTUPS ARE RISKY BUSINESS, AND THE ODDS ARE NOT VERY INTERESTING...

1 IN A 100...

The European Unicorn list is a very limited one, with only 208 companies:

And Portugal has already produced 4:

And curiously, odds are slightly better in Europe than in the USA

~$9,5B

% of companies

EUROPE

1.22 1.07UNITED STATES

~$22B ~$3B ~$1,3B

With some others lining up, like:

Sources: Dealroom.codata excludes: biotech, secondary transactions, debt, lending capital, and grants, and Israel.

1 Source: Market cap at date of the report. | 2 Source: According to Forbes. | 3 Source: TalkDesk's press release.4 Source: Feedzai valuation is based on the latest 200M dollars investment from KKR in March 2021.

1 2 3 4

Where are we today?

Portugal is a fashionable place, not only as a travel destination,but also as a tech place.

Quality of life, the sun and sea, cost of labour, and specialized talent have obviously something to do with it, but there is significant progress on the development of the startup ecosystem.

It has become a highlight in the European startup scene, especially after hosting the WebSummit in 2016, putting the country on the map as one of the hippest places to be in.

The arrival of international and experienced capital, together with the maturing of local investors has also attracted the attention of some talented engineers with a global mindset.

STARTUP PORTUGAL HAS BEEN DOCUMENTING PROGRESS, AND THE CURRENT ESTIMATION POINTS TO:

WHICH IS 13% ABOVE THE AVERAGE NUMBER OF STARTUPS PER CAPITA

IN EUROPE: 190 (PER MILLION INHABITANTS) 2

Startups in Portugal

1 Source: Startupportugal.com; 2 Source: Dealroom.co

Startups / Scaleups

Where are we today?

The portuguese startup profile

FOCUSED ON INTERNATIONAL MARKETS

with a small domestic market, Portuguese startups have no alternative than looking to international markets, specially the European Market, taking advantage of the open economic zone. Some startups even prioritize USA markets in their business plans and are born global.

1 Source: EU Startup Monitor Project (2019)2 Source: startupportugal.com

PEOPLE EMPLOYED on average1 8.8 B2B Business Model2

75,2% MALE There is a huge94,9% gender gap, as EU averageis 82,8% (2)

Startups / Scaleups

Where are we today?

Split by stage and comparison to Europe

SEED STAGE STARTUP STAGE GROWTH STAGE STEADY STAGE

DISTRIBUTION OF STARTUPS BY DEVELOPMENT STAGE

Portugal

EuropeanAverage

Source: Statista 2018

A LOOK AT THE SPLIT OF PORTUGUESE STARTUPS PER STAGE SHOWS THAT THERE IS MORE EMPHASIS AT AN EARLY STAGE.

IT IS A YOUNGER ECOSYSTEM THAN THE AVERAGE EUROPEAN ONE.

18% 52% 26% 5%

13% 47% 34% 3%

Startups / Scaleups

Source: StartupPortugal.com

Where are we today?

Vibrant ecosystem in the North and Center, aggregating hubs like Porto, Braga and Aveiro. With Porto waging in 19%.

Coimbra is also a key-hub in the Center region.

Lisbon account for 18% of the total.

There are a lot of development opportunities in the islands of Azores and Madeira, and their potential for sea-related activities could be easily leveraged.

Portugal is a very interesting place to startup.

A VIEW AT THE SPLIT BY REGION SHOWS:

Regional startup split

AZORES

MADEIRA

LISBON

SOUTH

CENTER

NORTH

PORTO

24%

19%

Startups / Scaleups

Where are we today?

NUMBER OF STARTUPS BY INDUSTRY

Startup split by industry

An analysis of the split by industry confirms the commonly held notion that the ecosystem is geared towards technology and B2B.

A mention to fintechs, with almost 10% of share, followed by health sciences with 8%.

Plenty of growth opportunity in sustainability and agrotech.

AGRICULTURE AND FARMING

3%

17%

TOURISM & LIFESTYLE

MEDIA ANDENTERTAINMENT

B2B

4%

BIO & HEALTH SCIENCES

8%

EDUCATION2%

ENERGY2%FINTECH

9%MANUFACTORING

4%

5%

Source: StartupPortugal.com

B2C & CONSUMER FOCUS

12%

SUSTAINABILITY2%

TECH33%

Startups / Scaleups

Where are we today?

ANOTHER INTERESTING PERSPECTIVE IS TO LOOK AT THE PICTURE FURTHER DOWN THE LINE, IN TERMS OF SCALEUPS

In fact, today’s scaleups are yesterday’s startups, and among the top 25 there is a clear bias towards B2B, though there is a stronger skew towards Consumer & Web, if compared to today’s startup image.

Source: Scaleup Portugal 2020 report

36%

MEDTECH & HEALTH IT

12%CLEANTECH & INDUSTRY 4.0

16%

ICT

28%CONSUMER & WEB

44%64%

Startup split by industryStartups / Scaleups

Where are we today?

Scaleups business model

AN INTERESTING DATA POINT ALSO AVAILABLE FOR THE TOP 25 SCALEUPS IS THEIR BUSINESS MODELS:

Source: Scaleup Portugal 2020 report

COMISSION9%

MANUFACTURING4%

MARKET PLACE17%

SUBSCRITION70%

A significantly vast majority is subscription-based, following the current X as a service trends.

17% characterize themselves as marketplaces, o�ering additional challenges when bootstrapping.

Only 4% relates to manufacturing, which stressesthe digital nature of today’s world.

Startups / Scaleups

Enablers

Where are we today?

Portugal: great place to travel, live and invest

Portugal is known for its climate, beaches, gastronomy and tradition, receiving many tourists every year. In recent years, Portugal has been improving and promoting what it has to o�er and is today a modern, eclectic and welcoming country, attracting not only di�erent types of tourists but also families and companies that establish their life and business in the territory.

Portugal was World's Leading

Destination 2017, 2018, 2019

and Europe's Leading

Destination 2020World Travel Awards

Portugal considered

strong innovator by the European

CommissionEuropean Innovation

Scoreboard 2020

Portugal ranked #25 out of 161 in “The Best Countries for Business”, Forbes, 2019

Portugal was the 2nd most open country for “foreign direct investment” (FDI) OECD FDI restrictiveness index, 2019

Portugal ranked 3rd most peaceful country in the world, among 163 states and territories.Global Peace Index, 2020

Portugal was the 1st in quality of life for expats, 2019

Lisbon was the 3rd best city for expats, 2020Expat Insider survey

Where are we today?Enablers

Source: AICEP, 2020

Great location

MAINLAND PORTUGAL IS LOCATED IN THE MOST SOUTH-WESTERN POINT OF CONTINENTAL EUROPE, ENSURING AN IMPORTANT GEO-STRATEGIC POSITION BETWEEN EUROPE, AMERICA AND AFRICA.

Nearest European country to the USand Canada

Same timezone as UKand Ireland

1 hour di�erencefrom CentralEuropean time


Source: AICEP, 2020

Good means of transport across the country and to the world

(The Global Competitiveness Report 2019, 141 countries).

IN THE WORLD WITH BETTER INFRASTRUCTURES

Railway network is available through 2546 kilometers of the country. All main seaports are connected to the rail network onwards to Spain and Central Europe.

RAILROAD DENSITY

3065 kilometers in motorway length.Portugal is the EU Member State with the 2nd best roads of all 28 countries according to the EU Transport Scoreboard.

QUALITY OF ROAD INFRASTRUCTURE


EFFICIENCY OF SEAPORT SERVICES

6 major international seaports.

Portugal is above EU average in connectivity score

Source: Broadband Coverage in Europe 2019, a study by IHS Markit, Omdia and Point Topic for the European Comission

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

PORTUGAL: COVERAGE BY TECHNOLOGY COMBINATION, 2019

Overall fixed broadband

(total)

Overall NGA broadband

(total)

Overall NGA broadband

(rural)

Overall fixed broadband

(rural)

Overall very high capacity

networks (VHCN) (total)

Overall very high capacity

networks (VHCN) (rural)

Portugal EU 28

It has very good VHCN broadband coverage and good fast broadband (NGA) coverage.

Mobile 4G coverage has reached 96%, at the same level as EU average.

As regards 5G, several 5G trials are underway in the cities Aveiro, Cascais, Évora, Porto, Matosinhos, Lisbon. The multi-band auction is in progress. The licences will be distributed during 1stQt 2021.


IN CONNECTIVITY (Digital Economy and Society Index (DESI) 2020, EU)

Portugal is actively promoting the digitalization of businesses

% OF ENTERPRISES WITH E-COMMERCE SALES OF AT LEAST 1% TURNOVER, 2020

0%

5%

10%

15%

20%

25%

30%

35%

40%

PORTUGAL IS ACTIVELY IMPLEMENTING MEASURES TO PROMOTE THE DIGITALIZATION OF BUSINESSES AND PUBLIC SERVICES.

Some examples are:


Strategy ICT 2020, promoting the digital transformation of public services.

A revamped edition of the flagship programme on administrative simplification SIMPLEX.

Web portal ePortugal, a central repository for all public services dedicated to citizens and businesses.

Mobile Medical Electronic Prescription, enabling doctors to digitally prescribe medicines through a smartphone.

Social Security + provides an easier and simpler way for citizens and companies to access social security services.

Industry 4.0, national strategy for the digitalizationof the economy.

ComércioDigital.pt, promoting the presence of SMEs in e-commerce and digital services.

Digital innovation hubs (DIH), an instrument for scaling up the digitalization of companies, particularly of SMEs.

Artificial Intelligence Portugal 2030 which aims to put Portugal at the forefront of ‘AI Education for all’.

Advanced Computing Portugal 2030 which aims to expand cyberinfrastructure and to improve advanced computing skills.

(Digital Economy and Society Index(DESI) 2020, EU)

IN DIGITAL PUBLIC SERVICES

(Digital Economy and Society Index(DESI) 2020, EU)

IN INTEGRATION OF DIGITAL TECNOLOGIES

(European Investment Bank, EU, 2020)

DIGITALIZATION INDEX

IN THE EIBIS

Source: Eurostat

Incubators/accelerators

Incubators are the institutions that have most contributed to the development and dynamism of the Portuguese business community, with an e�ective role in the survival rate of ideas and innovative startups.

The "National Network of incubators" was created as part of the Startup Portugal Strategy. Its role is to promote cooperation and the sharing of resources and knowledge, in order to improve products and services made available to entrepreneurs and companies.

From 2016 to 2020, the number of incubators grew by 40%.

169 incubators distributed across the country o�er 2325 incubator rooms.

Nº OF INCUBATORS

Nº OF INCUBATORROOMS

Source: RNI, Portuguese Incubators Monitor, 2020

20202020

2 325121

169

2 178

20162016


Startup Lisboa began its activity in February 2012. It facilitates access to investment, mentors, strategic partners and potential customers. It is also running two acceleration programs to innovate the communication and media industry and to reshape the ecosystem of restaurants.

"Fábrica de Startups" is an incubator and has several accelerator programs for startups. It is also a connection point between Portugal, Brazil, and Macao. Since 2012 more than 2500 entrepreneurs have worked with its methodologies of creation, validation and growth of ideas.

Startup Braga supports new technology-based companies in the areas of digital economy, medical technologies and nanotechnology, through pre-acceleration, acceleration and incubation programs. In partnership with Microsoft Ventures it provides business acceleration programs for startups with global ambitions.

UPTEC supports the transfer of knowledge between the university and the market, by fostering the creation of technological, scientific and creative companies and attracting innovation centers of national and international companies.

Operating since 2010, BGI has accelerated 154 new ventures, with a survival rate to date of 60.4%. It provides opportunities to deep tech startups via venture financing, connecting innovators with global investors, and acceleration programs.

Demium Startups was founded in 2013, having started operations in Portugal in 2019. It is an incubator and helps entrepreneurs to create a startup from scratch. It supports the overall cycle and the international expansion.

Fintech House is a hub for Fintech, Insurtech, Regtech, and Cybersecurity in Portugal. It is the physical arm of the Portugal Fintech Association. The House provides access to regulators, talent, capital, partners or potential clients.

Incubators / accelerators o�er a variety of services

A LARGE NUMBER OF STARTUPS DO NOT REQUIRE A PHYSICAL OFFICE AND OPT FOR A DIGITAL INCUBATION.

DISTRIBUTION OF INCUBATED STARTUPS BY SERVICE MODEL

% OF INCUBATORS DELIVERING THE SERVICE

Business model support

Marketing support

Juridical support

Account support

Acceleration program

Free pre-incubation

Prototyping support

Networking and events

92%

88%

Funding support 88%

71%

65%

50%

45%

41%

54%

Source: RNI, Portuguese Incubators Monitor, 2020 Source: RNI, Portuguese Incubators Monitor, 2020


In addition to the typical amenities for startups, there is a wide range of services for startup and growing companies, ranging from co-working spaces to support services for product development and marketing.

51%Startups in VirtualIncubation

49%Startups in PhysicalIncubation

Communication support 78%

Policy,Regulation

& Incentives

Where are we today?

Policy, Regulation & Incentives

Where are we today?

GENERAL INCENTIVES FOR INVESTMENT:

GOLDEN VISA PROGRAMME Residency-by-investment program in a bid to push more foreign investors towards low residency regions.

PRODUCTIVE INVESTMENT Financial and tax incentives for new products, services or processes and innovation.

R&D INVESTMENTFinancial incentives for investment in R&D activities.

JOB CREATION INVESTMENTSFinancial support to internships for unemployed graduated young people and for long-time unemployed people.

COMPETE 2020Program also available for foreign investment. Incentives to projects based on knowledge intensive activities, transportable or internationalizable goods and services and to enhance the qualification and export orientation.

DOINGBUSINESSMeasuring Business Regulations190 countries

Global Innovation Index 131 countries

#39in GeneralRanking

#24 Institutions

Incentives welcome foreign investment

#1Trading Across Borders

#31 in GeneralRanking


Where are we today?

Incentives and support to startups

ECONOMIC RELIEF MEASURES TO HELP THE STARTUP ECOSYSTEM

MEZZANINE FUNDING FORSTARTUPS (INNOV-ID)

Designed to protect startups that have benefited from investment. A loan convertible into “social

capital (supplies)” after 12 months, applying a discount rate that allows startups to avoid

a dilution of investors’ equity.

SEMENTEA program developed to encourage small private investors to invest on innovative startups. It encourages innovation and the creation and growth of entrepreneurial projects, yielding tax breaks for investments on certified startups.

200MThe 200m co-investment fund, managed by PME Investimentos – a public company regulated by the Bank of Portugal - whose mission is to de-velop innovative funding instruments for Portu-guese companies.

MISSIONS ABROADAn initiative to further promote Portuguese start-ups abroad. In past missions, StartupPortugal took Portuguese startups to either participate in a tech event, to meet investors and important play-ers, to visit incubators and other important local tech hubs, or to help Portuguese companies with recruitment processes in foreign countries.

ZLT (Free zones for technology)The ZLTs facilitates the realization of research, demonstration and testing activities, in a real environment, of innovative technologies, products, services, processes and models. (ongoing)

E-RESIDENCY 2.0The e-residency 2.0 is a program for digital nomads and entrepreneurs without a fixed base. Allows the creation of an on-line company, while granting access to public and private services in Portugal. (Under developement)

STARTUP VISAIt aims to attract investment, talent and innovation to Portugal. Young entrepreneurs from all over the

world who want to open an innovative company will have quick access to a residence visa that gives them the possibility to create or move a

their startup enterprise to Portugal.

STARTUP VOUCHERProgram for young entrepreneurs in idea stage.

It aims to reduce the risks youngsters take in venturing and creating a company by granting

a scholarship, incubation and mentorship.

INCUBATION VOUCHERThis measure is intended to provide support for simplified projects of companies in the area of entrepreneurship by

contracting incubation services provided by of previously certified incubators.

OPERATION FOLLOW-ONSTo be carried out together with Portugal Ventures’ Capital Partners Network, it aims at shoring up the

capital of startups already backed by other investors. Financial initiative through the Financial Development Institution (IFD), Portugal Ventures

and Imprensa Nacional-Casa da Moeda.

TECH VISATech Visa is a certification program addressed

to companies that wish to attract highly qualified and specialized sta� to Portugal, nationals from

countries not included in the Schengen area. IAPMEI is responsible for the evaluation

and certification of companies.

ROAD2WEBSUMMITAn initiative designed to support Portugal-based startups with their web summit participation. It includes access access to the event and intensive training.


Where are we today?

No restrictions to foreign capital entry

In Portugal there are no restrictions to foreign capital entry, for regulatory framework says no one can be discriminat-ed on the grounds of nationality. In that way, the rules applicable to foreign investment are similar to those applicable to domestic investment, and no special registration or notification is required of any authority in this case. All the steps that are needed in order to invest in Portugal are now much simpler.

FOREIGN INVESTMENT RULES FOLLOW PRINCIPLES OF FREE ESTABLISHMENT AND NON-DISCRIMINATION.

BUSINESS FACILITATION

COMPETITION AND ANTI-TRUST LAWS

INTELLECTUAL PROPERTY RIGHTS

TRANSPARENCY OF THE REGULATORY SYSTEM

Simplex: measures taken to reduce bureaucracyEmpresa na Hora: (“Business in an Hour”) program that facilitates company incorporation by citizens and non-citizens in less than 60 minutes.In 2007, the Government established AICEP, an agency to promote foreign investment and trade that also manages industrial parks.

Portuguese law specifically prohibits collusion between companies to fix prices, limit supplies, share markets or sources of supply, discriminate in transactions, or force unrelated obligations on other parties.

Legal, regulatory, and accounting systems are consistent with international norms. Rule-making and regulatory authorities exist across sectors including energy, telecommunications, security markets, finance and health.

Intellectual property rights (IPR) infringement and theft are not common in Portugal. It is fairly easy for investors to register copyrights, industrial property, patents, and designs with Portugal’s Institute of Industrial Propert y (INPI) and the Inspectorate-General of Cultural Activities (IGAC). Portugal is one of the countries with lower patent costs (online and o�ine).


Where are we today?

In recent years labor legislation has changed and was adapted in order to simplify and give some flexibility to the labor market. Some aspects of the contracts are now di�erent, helping companies to reduce costs with their workers:

Monthly national minimum salary (2020): 665€

Monthly base salary: The gross amount, paid regularly and corresponding to the normal working period.

Monthly earnings: The gross amount paid monthly, on a regular basis, for the hours of work performed, as well as for the hours paid but not actually worked. This includes, in addition to the basic pay, all premiums and regular grants (seniority bonuses, allowances for function, food, housing, transportation, seniority, productivity, attendance, shift, timetable exemption, arduous or hazardous work, etc.), as well as payment for overtime.

Worker's earnings and taxes

The duration of the contracts.

IRS Tax (Personnel Income Tax): tributes all annual value of the citizens' income. The rates vary between 14.5% and 48%.

Tax benefits for job creation, reducing the amount of discounts the employers and employees have to do.

Incentives and benefits to promote contracts and the employment of specific worker groups: creation of new job vacancies; hiring long-term unemployed, young people looking for the first job; recruitment of disabled workers.

APPLICABLE RATES VALUE/AMOUNT

TYPE

Base Salary x14 (Holidays and Christmas Bonuses)

Meal Allowance x11 4,77€/dayof work

Work Insurance x14

Social Security - EmployerContribution

Working Compensation Fundx12

Social Security - EmployeeContribution

1% of base salary(indicative amount)

23,75% of the base salary

1% of the base salary

11% of the base salary

Reference amount for the public sector

Mandatory

Mandatory

Mandatory

Mandatory

Where are we today?

Talent

Portugal in global rankings

PORTUGUESE TALENT IS RECOGNIZED FOR ITS QUALIFICATIONS, FLEXIBILITY AND COMMITMENT.

WORLD TALENT RANKING, 2020

#26 out of 63 countries

#12 ManagementEducation

#7 LanguageSkills

#14UniversityEducation

GLOBAL TALENT COMPETITIVENESS INDEX

#28out of 132 countries

Source: IMD World Competitiveness Center

ENGLISH PROFICIENCY INDEX, 2020


- High Proficiency

Source: Education First

GLOBAL INNOVATION INDEX, 2020


#29

Knowledge Creation

#14

Knowledge Impact

Source: Cornell University, INSEAD, and the World Intellectual Property Organization

Source: INSEAD, the Adecco Group, and Google Inc.

Where are we today?Talent

Higher education has been growing

The Portuguese school system has witnessed historic improvements in access, attainment and performance over the past 20 years. In 2020, 28% of the Portuguese population between 25 to 64 years old had higher education. This rate increased considerably to 42%, in a 25 to 34 years old population.

28% of students graduated in the areas of Sciences, ICT and Engineering.

NUMBER OF STUDENTS IN TERTIARY EDUCATION NUMBER OF GRADUATES IN TERTIARY EDUCATION

Source: www.ine.pt; data updated on September 2020S&T refers to: "Natural sciences, mathematics and statistics", "Information and Communication Technologies (ICTs)“and "Engineering, manufacturing and construction"

0

50 000

100 000

150 000

200 000

250 000

300 000

350 000

400 000

Students enrolled in S&T areas of tertiary education Other areas

Source: www.ine.pt; data updated on July 2020S&T refers to: "Natural sciences, mathematics and statistics", "Information and Communication Technologies (ICTs)“and "Engineering, manufacturing and construction"

0

20 000

40 000

60 000

80 000

100 000

Students enrolled in S&T areas of tertiary education Other areas

Talent

Where are we today?

13%

21% 19%

14%

53%

1% 1%1%5%

University Bachelor

University Master

University PhD

University studies but no degree

Less than high school

High School

Source: EU Startup Monitor, Europeen Comission, 2018 Report Source: BGI, EIT: Scaleup Portugal, 2020

LEVEL OF EDUCATION OF STARTUPS’ FOUNDERS TOP 25 SCALEUPS FOUNDERS DISTRIBUTION BY LEVEL OF EDUCATION

The importance of higher education in startups/scaleups

THE PEOPLE BEHIND PORTUGUESE STARTUPS AND TOP SCALEUPS ARE HIGHLY QUALIFIED WITH THE MAJORITY OF THEM HOLDING AT LEAST A MASTER'S DEGREE.

Portugal EU Average

3%

8%

56%

Talent

Where are we today?

Foreign students and graduates

Source: www.ine.pt; data updated on September 2020

PORTUGAL EMBRACES DIVERSITY AND INTERNATIONAL ENVIRONMENTS

Over the last five years, the number of foreign students choosing Portugal as their destination has significantly risen. The majority come from Brazil, but European countries are well represented, like Germany and Italy. Also, people from African countries like Cape Verdeans and Angolans are choosing Portugal to get a diploma. This has been

0

10 000

20 000

30 000

40 000

50 000

60 000

70 000

NUMBER OF FOREIGN STUDENTS ENROLLED IN TERTIARY EDUCATION

Talent

Where are we today?

NUMBER OF FOREIGN GRADUATES

0

2 000

4 000

6 000

8 000

shaping the higher education and science landscape into an open, multicultural and international environment over the last years. The number of foreign graduates in 2019 increased 17% over the previous year. The number of enrolled students continued to grow in 2020.

ICT skills are being built, in terciary education and other programs

SOME INNOVATIVE PROGRAMS HAVE EMERGED TO PREPARE WORKERS FOR A ROLE IN ICT

A BUNCH OF GOVERNMENTAL MEASURES ARE IN PLACE AIMING THE DEVELOPMENT OF A DIGITAL SOCIETY

UPSKILL PROJECT – DIGITAL SKILLS & JOBSUpskill project, launched in 2020, is the outcome of a joint initiative between an industry association (APDC), the Public Employment O�ce (IEFP) and partner universities. The 9-month courses aim to address ICT skills gaps identified by IT companies in Portugal and will take place at di�erent higher education institutions across the country. Java, .NET, Python, Cloud, Salesforce and Outsystems are some of the courses covered under this Programme, corresponding to the skills areas where demand is strongest.

42 LISBOA – PROGRAMMING SCHOOLFounded in Paris in 2013, 42 Lisboa is a programming school operating in more than 20 countries, being recognized as one of the best programming schools in the world. A 42 school was opened in Lisbon in 2020. 42 is not a traditional school. It is free of charge, and it doesn’t require any academic degree or coding experience. The school has a practical approach, based on peer-to-peer collaboration.

Portugal adopted the “Action Plan for Digital Transition” with the purpose of accelerating the country’s digitalization. One of the pillars encompasses a measure for “Capacity building and digital inclusion” that specifically addresses: 1) Digital education; 2) Professional training and reskilling and 3) Digital inclusion and literacy.

The Portuguese government established the “National Digital Competences Initiative e.2030”, an integrated public policy to enhance and foster digital competences. One of its action-lines focuses on promoting specialization in digital technologies and applications to improve employability and create higher added value in the economy.

Talent

Where are we today?

Source: Eurostat

Talent

Where are we today?

In 2019, average hourly labor costs were estimated at EUR 28.2. However, this average masks sizeable gaps between EU member-states, with hourly labour costs ranging between EUR 6.0 and EUR 44.7.

Portuguese labor cost is around 50% of the average cost.

Between 2018 and 2019, hourly labor costs in the whole economy expressed in euro rose by 2.9 % in the EU and by 2.5% in the euro area.

Cost of talent

COST OF TALENT IN PORTUGAL BELOW EU AVERAGE

LABOR COSTS PER HOUR, 2019

0

5

10

15

20

25

30

35

40

45

50

Where are we today?

Knowledge

1, 2: Sources: DGEEC, 2020 and DGES3: Source: The Financial Times

Tertiary educational institutions are divided into universities and polytechnics. The main di�erence between the two is that the universities have a greater focus on academic research, while the polytechnics are more focused on preparing students for a specific career path.

In 2020 there were 123 universities and 161 polytechnics in Portugal.1

There are around 771 higher education courses in 135 schools, in the areas of Sciences, Mathematics and Information Technology. 91 courses in 45 schools in the areas of Engineering of Information Technology.2

Business Schools are internationally recognized, with two schools ranking as the top 25 best full-time MBAs in Europe.3

Universities

PORTUGAL HAS A WIDE RANGE OF EDUCATIONAL INSTITUTIONS AND COURSES IN THE AREAS OF SCIENCES AND TECHNOLOGY

TIMES HIGHER EDUCATION WORLD UNIVERSITY RANKINGS 2021(1500 UNIVERSITIES)

Nº OF STUDENTS

#351-400

#351-400

#401-500

#501-600

#601-800

#601-800

#601-800

#601-800

11 187

19 976

32 586

49 019

9 931

7 180

21 332

8 868

Some of the Portuguese Universities included in “The World University Ranking”

Where are we today?Knowledge


Sources: DGEEC, 2020

1 355

Research & development

HIGH GROWTH OF EXPENDITURES ON R&D.ENGINEERING SCIENCES AND TECHNOLOGIES TAKE THE BIGGEST SLICE

Engineering, Sciences and Technologies

Medical and Health Sciences

ExactSciences

426

373

318

264

157

99

SocialSciences

NaturalSciences

Humanitiesand Arts

Agrarianand Veterinary Sciences

EXPENDITURE ON RESEARCH & DEVELOPMENT BY FIELD OF RESEARCH, 2019, MILLIONS €

EXPENDITURE ON RESEARCH & DEVELOPMENT

0

500

1 000

1 500

2 000

2 500

3 000

3 500 1,45%

1,40%

1,35%

1,30%

1,25%

1,20%

1,15%

Source: DGEEC, 2021

Expenditure % of GDP

MILLIONS €

Entrepreneurship and Academia

Source: www.dges.gov.pt

Where are we today?

Apart from enabling people with the required specific and technical skillset, Academia also plays an important role in teaching entrepreneurship and innovation as a domain in itself.

The formal academic o�er shows:

59 courses, in between PhDs, Masters’, or undergraduate programs, dedicated to Entrepreneurship and/or Innovation

Throughout 32 institutions (universities, polytechnics, public, and private)

With a geographically evenly spread distribution in the country

Also worth mentioning the 8 programs dedicated to Social, Impact, and/or Sustainability.

Equally important are the connections to the rest of the value chain, actually bridging the gap between students and other ecosystem stakeholders.

Most universities and polytechnics, if not all, have specific o�ces or bureaus to serve the purpose, organizing contests, hackathons, events or other specific activities to generate interest and rally students.

Knowledge

Some corporates also play relevant roles. As an example, Santander supports Portuguese Academia (over 50 entities) and over 4,000 students through a speci�c 5,7m€ program in grants, internships and prizes, covering: teaching entrepreneurship skills, supporting new projects and employability support.

The bank has a speci�c policy of promoting participation in international competitions (Santander X Tomorrow Challenge, which allocates 1m€ to 20 projects) and Academies (European Innovation Academy, a 3 week immersion program), startup development training (like Explorer Program or Santander Poliempreende), Innovation Challenges, and Research prizes.

There is also a relevant social impact entrepreneurship angle, with several speci�c training courses and contests (Uni.Covid-19 has awarded a total of 30k€ to 14 new projects).

As an example, Universidade Católica’s Center for Technological Innovation & Entrepreneurship serves as a link between students (and academia) and the ecosystem, with a rich agenda, such as:

The Forward program, a pre-acceleration program to support teams to go through the ideation phase.

Women Entrepreneurship Award, recognizing their work and incentivize other women to launch their own business.


Sources: DGEEC, 2021Sources: DGEEC, 2021

Enterprises Higher Education State Private non-profit institutions

0

10 000

20 000

30 000

40 000

50 000

60 000

Research & development

ENTERPRISES PLAY A BIG ROLE IN KNOWLEDGE DEVELOPMENT

PERSONS EMPLOYED AT FULL-TIME EQUIVALENT (FTE) IN R&DEXPENDITURE ON RESEARCH & DEVELOPMENTBY SECTOR OF PERFORMANCE

TOP ENTERPRISES WITH HIGHER SPENDING ON R&D, 2019

40%

5%

53%

2%

Corporations

Where are we today?

Helping in the product development and

providing value along the lifecycle, or, if not,

just by reselling it.

Corporations are an interested party in the ecosystem

CORPORATIONS OFTEN LOOK AT YOUNG, AGILE AND INNOVATIVE STARTUPS AS:

a way of experimenting and innovating outside their own boundaries and constraints

a source of, and funnel for, products that can be incorporated in their o�er and add significant value to their customer value propositions

a way of di�erentiating themselves in their native markets

a source of talent and human capital.

CORPORATIONS HAVE A FEW

ROLES TO PLAY IN THE STARTUP

ECOSYSTEM

PARTNERS

Establishing corporate venture capital arms, with a similar

behaviour to other VCs being a source of “exits”, e�ectively

running startup or scaleup acquisition processes, thus

providing liquidity to the ecosystem.

INVESTORS

As active innovation seekers, launching innovation challenges and sponsoring ecosystems development activities that foster development, like hackathons of events.

SPONSORS

Consuming products and services in their value chains and providing a more predictable or friendlier source of revenue, access to markets, or volume.

CUSTOMERS

Where are we today?Corporations

Some local initiatives supporting entrepreneurship

CTT, within the scope of its innovation policy and support of the national ecosystem, has launched a startup technological challenge in order to accelerate its own digital transformation in mail handling.

CTT has created an investment fund to support Small and Medium Businesses and Startup development, reinforcing its connection to

the innovation ecosystem.

The fund will invest 4m€ in startups (seed, series A and growth), in sectors aligned with CTT’s priorities, namely e-commerce, operations & logistics, communication, fintech, retail and advertising.

EDP invests highest value ever in startups in the areas of digital innovation, electric mobility and smart grids and announces �rst exit.

The priority areas for investment are aligned with EDP group's business and are divided between clean energies, energy storage solutions, smart grids, digital innovation and solutions related to customers

Corporate VCs can support startups very e�ectively, being their �rst customer, being their �rst reference that can then be used to acquire new customers and strategic focus in accelerating startup development.

Techstars, the worldwide network that helps entrepreneurs succeed, and Semapa Next, the venture capital business unit of the Semapa Group, are partnering to bring a new mentorship-driven accelerator program to Lisbon, Portugal.

The program will focus on companies that are solving problems in manufacturing, transportation, logistics, sustainability, and travel and leisure. The companies that have been selected to join us for this year’s program in Lisbon are coming from the U.S., U.K., Australia, Germany, France, Slovenia, Singapore, and Portugal.

Established health companies are looking for startups with ideas, who want to test and develop a new technology based product.

The group bets on Research & Development and Innovation to produce and develop the only 2 Portuguese medicines, since 1924.

Source: Some examples published in the press in 2020/2021


Large portuguese companies investing in startups

Source: Some examples published in the press in 2020/2021


Galp invites startups and technology companies to present solutions and enable and enhance the decentralized production of energy, with particular focus on self-consumption.

Galp will create a new innovation facility in 2020. UP – Upcoming Energies is the name of the project which will be launched in January, based in Lisbon, and very much focused in searching for solutions for the axes of energy transition, mobility, digital and circular economy.

NOS launched a 10m€ investment fund to stimulate research and development in the use of 5G by the community of entrepreneurs in Portugal.

The 5G Accelerator - Collaborative innovation programme is an initiative by NOS and AWS (Amazon Web Services), in partnership with Startup Lisboa, to accelerate 5G transformation and innovation in Portugal. To this end, it will select the most daring startups committed to placing new solutions based on 5G on the market or boosting their current business models through the application of this technology.

Sonae MC seeks startups with technology for retail through BrightPixel and Sonae MC, Maia’s group integrates Reach consortium with a total budget of 3,5m€.

Once again, Sonae was distinguished by the European Commission as one of the best European companies working with startups. The multinational made the exclusive list of companies classi�ed as "Open Innovation Challengers”, by the Startup Europe Partnership on behalf of the European Commission

Companies from all over the world choose Portugal to install business services centers: shared services centers, competence centers and business process outsourcing.

Around 140 companies have installed about 158 service centers in Portugal92% are from foreign companies.

Global business services and competence centers are driving innovation and e�ciency and already play an important role in Portuguese economy.

Portugal on the radar of multinationals

LISBONAREA

MADEIRA& AZORES

CENTERAREA

ALENTEJO & ALGARVE

PORTO &NORTH

Altran, Bosch, Faurecia, Yazaki, IBM, La Redoute, Blue-Infinity, Altice Labs, Teleperformance, Randstad.

Accenture, Adidas, Altice, Altran, Armatis, Bosch, CGI, Concentrix, Euronext, Fujitsu, HB Fueller, Hostelworld, IBM, Infineon, Jumia, Linde, Lufthansa, Natixis, OLR, Paddy Power Betfair, Peugeot, Randstad, SEG Automotive, Sitel, Transcom, Vestas, Vodafone, Webhelp, Wipro, ZF TRW.

Adnovum, Accenture, Alcatel-Lucent Enterprise, Altran, Amplexor, Arvato Bertelsmann Blue-Infinity, BNP Paribas, Bosch, Bose, CGI, Chassis Brake International, Cisco, Claranet, Colt Technologies, Companeo, Coriant, DAR Engineering, Deloitte, Europ Assistance, Europcar, Everis-NTT, Génération Verlingue, GFI, Grünenthal, Hitachi, HP Enterprise, IBM, Konecta, La Redoute, Manpower, Mercedes-Benz, Mercer, Microsoft, Nestlé, Netjets, Panalpina, Philip Morris, Schneider Electric, Sellbytel, SGL Carbon, Siemens, Sitel, Sky, Skyline Communications, Solvay, Subsea 7, Technip, Teleperformance, Thales, TNT, Transcom, Uber, Ubiquity Global Services, Vinci, Visteon, Vodafone, Webhelp, Willis Towers Watson, Xerox, Zalando.

Cap Gemini, Fujitsu, Atos, Embraer

Source: AICEP, 2019


Opens a Biotech R&D center in Porto

Opens a technology center for automated mobility in Braga

Opens a Tech Center for EMEAregion, in Lisbon

Opens a Digital Delivery Hubin Lisbon

Opens an IT development in Porto

Expansion of the Lisbon Hubwith Data & Services team

Opens its ‘Cyber Security Operations Center’ in Lisbon

Strengthens R&D capabilities with anew engineering design center in Porto

New software development center in Lisbon

Opens its New Technology Hubin Lisbon

Opens a new Global Shared Services Center in Lisbon area

Portugal on the radar of multinationals

MAJOR COMPANIES ARE INVESTING AND MOVING TO PORTUGAL

RECENT INDUSTRIAL INVESTMENT:

GMD

MECACHROME

BORGWARNER

HOWA TRAMICO

BOSCH

EBERSPÄCHER

SAKTHI M&A OPERATIONS


Source: AICEP, 2020

New industrial unit.



Expansion of existing plant.

First industrial unit.

Bosh car multimedia strengthens its R&D investment.

Opens exhaust technology plant.

Where are we today?

Capital

Where are we today?Capital

Capital fuels the ecosystem!

Capital is the key enabler that allows startups to research,

experiment, develop and achieve the Holy Grail of

product-market fit, upon which they can aspire to scale

and eventually command a market segment and carry

a unicorn label.

As an individual asset class, Venture Capital has the appeal

of potentially providing “moonshot” payouts, but it is also

a high risk business, as startup mortality rate is significant.

It entails a lot more than just money, requiring a highly

customized approach to a startup’s lifecycle, most often also

requiring experience, insight, coaching and industry network.

Given its somewhat not very public nature, as well as capital’s

global movements (especially in the European Union, with

its free market), precise and detailed data are always a challenge

to come by.

Capital

Where are we today?

Capital:The virtuous spiral

Capital has the potential to generate

a virtuous spiral.

It is di�cult to gather “flammable material”

together to form an ecosystems, but once

the ignition point is reached and stars align,

capital is the fuel that can propel a startup

through its life cycle at lightning speed.

Worth mentioning is the singularity where

successful founders, after cashing in,

become Business Angels and VCs,

and give back to the ecosystems, funding

and coaching young startups.

InflammableMaterial

Ignition

SeedPublic

Incentives

Business

Angels

Corporations

Venture

Capital

Some founders exit and pump back money into the ecosystem

Early Stage

Growth

Capital

Where are we today?


Europe NorthAmerica Asia

Rest ofWorld

0.0

50.0

100.0

150.0

Cap

ital

Inve

sted

($

B)

2016

2017

2018

2019

2020

CAPITAL INVESTED ($B) IN EUROPE, NORTH AMERICA, ASIA AND REST OF WORLD BY YEAR

Total capital has risen

11% in 2020, in spite

of Covid-19 e�ects

Venture Capital

is mostly invested

in 3 regionsNORTH AMERICA

represents

~50%of the allocation

EUROPE’S share has been

rising from11% to 15%

of the total

ASIAtypically weighs

30%

Capital invested world wide, split by region

Capital

Where are we today?

Capital invested in Europe

the projection for the total Venture Capital

invested in Europe in 2020 is $41B, pretty

much in line with the previous year of 2019.

Evolution is significant, showing:

Accelerating growth rates of 38% (2016-2017),

and over 78% (2017-2019)

Flat evolution in 2020, showing resilience,

even considering the e�ect of Covid-19

$23

2019

2020

2017

Capital Invested ($B)

2016

$17

2018

$41

$41


$41

projection

Capital

Where are we today?

An analysis of the preferred industries

for investment in Europe highlights

the following data points:

Fintech takes the lead, followed

by Enterprise Software and Healthcare.

The market is pretty much skewed towards

B2B, not surprisingly.

Europe’s multi-country, multi-culture,

multi-language environment does not

favor a more uniform consumer market

(like the USA), and a legacy of fragmented

local regulation presents plenty of

opportunities for disintermediation.


Invested capital allocation in europe, by industry

Fintech

9 392

Enterprise

Software

6 922

Health

4 226Transportation2 964

Energy

2 806

Marketing2 784

Food2 175

Security1 365

Real Estate1 214

Robotics1 180

Telecom995

Travel

732Media

725Sports

713Fashion

703

Semicon-ductors

675

Home

Living

618

Legal

559

Gaming

381

Kids

332

Educ.

326

Music, 276 Hosting, 196 Event Tech,146

Jobs

Recruit.

447

CAPITAL INVESTED ($B) BY INDUSTRY

Capital

Where are we today?

A FINER LOOK AT 2 FOCUS AREAS, SAAS AND BIG TECH SHOWS A HUGE BET ON TECHNOLOGY AND SOFTWARE:


Capital allocation in SaaS and big tech in Europe

CAPITAL INVESTED ($B) IN EUROPEAN SAAS COMPANIES PER YEAR

CAPITAL INVESTED ($B) IN EUROPEAN DEEP TECH COMPANIES PER YEAR

2017 20192018

$8,1Capital Invested ($B) Capital Invested ($B)

$4,0$5,9

$11,7

2016 2017 201920182016

$7

$3,9$6,1 $10,2

$11,8B Allocated to SaaS in 2019 represents a ~44% increase from 2018 $10,2B Allocated to BigTech in 2019 represents

a ~46% increase from 2018

Capital

Where are we today?


Europe is mostly an Early Stage investor,

with small funds, under 25M€

Fund sizes and preferred investment stages in Europe

FUND SIZE

< €25M

€100-250M

€250-500M

€500M+

€50-100M

€25-50M

INVESTMENT STAGE

0.0

20

40

60

80 Seed

Series A

Series B

Series C

Series D

% o

f V

Cs

First-time fund manager(Fund I)

Emerging fund manager(Fund II or III)

Established fund manager(Fund IV+)

Rookie fund managers also tend to focus on early stage,

and as they gain experience, tend to shift more into Series A,

probably to minimize risk

CAPITAL MATURITY IN EUROPE:


Capital invested in Portugal: Evolution 2016-2019

Capital invested in startups in Portugal, although an elusive number and di�cult to calculate, is:

Commonly accepted to be -166m€ in 2019

Showing a x2,5 (!) growth since 2018

Leaving the country at #17 in the European ranking with 0,43% of the overall total ~38,5b€

Cumulatively, Portugal ranks #23rd in terms of countries in Europe with more capital invested

Capital Invested in Portugal per year

2016$53M

$26M2017

2018$66M

2019$166M

20191

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

United Kingdom

Germany

France

Sweden

Switzerland

Netherlands

Spain

Finland

Romania

Italy

Denmark

Ireland

Belgium

Norway

Poland

Lithuania

Portugal

Croatia

Luxembourg

Russia

Austria

Greece

Estonia

Cyprus

Hungary

Czech Republic

Iceland

Malta

Latvia

Bulgaria

13 210

6 877

4 818

3 030

1 662

1 520

1 457

982

772

576

547

541

468

372

229

183

166

154

150

146

134

121

93

84

77

35

22

21

21

17

Ranking

Capital

Where are we today?

Sources: CMVM Venture Capital 2019 activity report

A look into capital registered in Portugal in 2019

average size of thefunds

invested in InformationTechnology

Not all local funds invest or divest in local startups.A local investment of 46m€ in early stage would mean that local funds represent -28% of the total amount of the inflow of capital into early stage in 2019.

companies, managing135 funds

FUND MANAGEMENT#52 36m� 11

representing 54% of the total amount under management

FUNDS OVER 100M€12,5%

454m�The reported total amountinvested in 2019 in early stage

46m� 454m�below 500k€ mostlystartups

EQUITY SHARES#620

Capital knows no borders, and is di�cult to track; however, information about funds registered locally with the local regulator (CMVM)

is publicly available and it is worth referring to.

In 2019, the overall amount of assets under management grew 6,6% to 5,1b€.

Here’s the current landscape of the industry:

The reported total amount of exits in 2019 in early stage

under management is in Funds below 20m€

OF THE TOTAL AMOUNT

Capital

Where are we today?

A view from the Portuguese Association of Business Angels (APBA) annual 2019 survey of its associates, which focuses primarily on the early stage, shows a ~x2,4 growth in the invested amount from 2018 to 2019, with Fintech, Healthcare and Industrial/Energy as the preferred industries.

2018

2019

5,5M€

13,4M€

INVESTMENT 2018/2019 INVESTED PROJECTS BY INDUSTRY

Fintech25%

Healthcare14%

IndustrialEnergy

11%Ecommerce7%

Sources: APBA report 2018/2019

A view from the side of the business angels on early stage

Capital

Where are we today?

The role of public capital in Portugal

PORTUGAL’S 2 MAIN INSTRUMENTS OF PUBLIC CAPITAL, PORTUGAL VENTURES AND 200M HAVE HAD A KEY ROLE IN THE LOCAL ECOSYSTEM.

Portugal Ventures playing the very early stage and leveraging ignition since 2012;

200m, a co-investment fund which has leveraged x2,5+ its capital, attracting foreign investors and providing mezzanine or early growth capital to high potential startups.

Interesting to note that Digital/ICT represent the majority of the targetsin both funds, though the rest of the sectors not always match.

2020 Report shows 17,7 M€ invested in +59 startups, and in 2021 12 investments had already been concluded with another47 ongoing.

182M€Managementsince 2012

155M€Investedsince 2012since 2012

+147New Companies

INDUSTRY SPLITLife

Sciences16%

Digital40%

Enginnering &Manufacturing36%

Tourism25%

MAINBUNSINESS

AREAS

ICT

Ecommerce

200M Portfólio

Software

Biotech

Tourism

Energy

Source: PortugalVentures.pt Source: 200m.pt

83,26Total Inv.

15,98

42,57

2020

30,68

11,77

2019

510

2018

KPIs at a Glance

Talent

Knowledge

Enablers

Policy,Regulation &

Incentives

Capital

RANK:#26 / 63 IMD WORLD TALENTRANKINGIMD 2020

RANK: #7 / 88 ENGLISH PROFICIENCYINDEXEF 2020

166M� IN 2019, GREW 150% From 2018

RANK:#17 IN EUROPE ON INVESTEDCAPITALDealroom

17,7M INVESTED BY PUBLIC CAPITAL IN +59 STARTUPSPortugal Ventures 2020

RANK: #39 / 190 ON EASE OF DOING BUSINESSThe World Bank 2019

RANK:#1 / 190 ON “TRADING ACROSS BORDERS”The World Bank 2019

2nd MOST OPEN COUNTRY FOR “FOREIGN DIRECT INVESTMENT”OECD, FDI restrictiveness index 2019

KPIs at a Glance

1,4% OF GDP IN EXPENDITURE ON R&DIN 2019DGEEC

2 BUSINESS SCHOOLS RANKING ON THE TOP 25 BEST FULL-TIME MBAS IN EUROPEThe Financial Times

4 UNICORNS

2159 STARTUPS 2020

13% ABOVE THE AVERAGENº OF STARTUPS PER CAPITA IN EUROPE

RANK: #12 FOR LISBON IN THE

TOP 100 EMERGINGECOSYSTEMSStartup Genome

2020

RANK: #21 / 141 IN INFRASTRUCTURESThe Global CompetitivenessReport 2019

1st IN QUALITYOF LIFEInternationsExpat 2019

3rd MOSTPEACEFUL COUNTRY Global PeaceIndex 2020

158 INCUBATORS2576 ROOMS Grew 31% (2016-2019)RNI, 2019

RANK: 28 / 132 GLOBAL TALENTCOMPETITIVENESSInsead, Adecco, Google, 2020

28% OF GRADUATES IN S&T AREASINE, 2020 (Sciences, ICT, Engineering)

91% OF THE STARTUPS’ FOUNDERS HAVE A UNIVERSITYDEGREEEU Startup Monitor, 2018

RANK: #12 / EU28 IN CONNECTIVITYDESI 2020

StartupsScaleups

Howdo we compare to Spain, Israel

and Singapore?

How do we compareto Spain, Israel and Singapore?

TRADINGACROSSBORDERSThe World Bank

#2

#13

#38

#58

#1

#1

#47

#67

Policy,Regulation &

Incentives

GLOBAL PEACEINDEX 2020Institute for Economics &Peace

#3

#7

#38

#145

#1

#2

#4

#9

#1

#7

#21

#23

39%

33%

29%

26%

Enablers

QUALITY OF LIFEInterNationsExpat Insider2019

INFRASTRUCTUREWEF, The GlobalCompetitivenessIndex 2019

FIXED ROADBANDSUBSCRIPTIONS(PER 100 PEOPLE)World Bank 2019

OPENNESSTO FDIOECD, FDI RegulatoryRestrictivenessIndex, 2019


GROSS DOMESTICEXPENDITURE ON R&DAS A PERCENTAGE OF GDPOECD 2018

4.9%

1.8%

1.4%

1.2%

Knowledge

GLOBAL TALENTCOMPETITIVENESSINDEXINSEAD, the Adecco Group,and Google Inc.

#3

#20

#28

#32

#9

#22

#26

#32

#7

#11

#24

#52

35%

29%

24%

8%

4%

3%

Talent

WORLDTALENTRANKING2020IMD

LANGUAGE SKILLSIMD, WorldTalent Ranking,2020

% OF GRADUATES FROMSCIENCE, TECHNOLOGY,ENGINEERING ANDMATHEMATICS IN TERTIARYEDUCATION / UNESCOInstitute for Statistics, 2017

TERTIARY STUDENTINFLOW, % OFFOREIGN STUDENTSENROLLEDOECD, 2018


TOP 100 EMERGINGECOSYSTEMRANKINGStartup Genome

#6

#6

#12

#17

CAPITAL INVESTEDIN STARTUPS AS% OF GDP

2.00%

1.39%

0.10%

0.07%

Nº OF STARTUPSPER 100THOUSANDSINHABITANTS

74

65

21

9

StartUpsScaleUps Capital

140

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PORTUGUESE MINT AND OFFICIAL PRINTING OFFICE

Scope and Methodology

The purpose of this study is to provide a comprehensive and in-depth view of the Portuguese

startup and entrepreneurial ecosystem. It provides a detailed view of where we are today,

who are the major players, what are the key KPI, how Portugal compares with other nations.

It is also the voice of entrepreneurs that chose Portugal as the best place to start-up.

In addition to the number of startups and information about policies, regulation, public

incentives, capital, talent, corporations, and key enablers of the ecosystem, this report analyzes

key emerging trends, challenges, opportunities, and what is next for the Portuguese ecosystem.

This report was developed based on existing IDC research, public data, a survey carried

out among more than one hundred startups founders, and more than 30 in-depth interviews

with key ecosystem’s stakeholders.

Research Director • Gabriel Coimbra, Group VP & Country Manager, IDCProject Manager • Pedro Cerdeira, Senior Advisor, IDC PortugalConsulting Manager • Vanda Soeiro, Consulting Manager, IDC PortugalDesign • Mariana Antunes, Designer, IDC Portugal

www.idc.com

Due to the dynamics of the ecosystem, this

report is constantlybeing updated.

Download the latest version here!

https://idcportugal.com/portugal-the-best-place-to-startup/

https://www.idc.com/

https://twitter.com/IDC

https://www.linkedin.com/authwall?trk=bf&trkInfo=AQE5Ko-cfxbkyQAAAXrc5E-gYQ6xmGeasleSJiTKhgtnNR2yLuoWnoXCB0ruIeGnVI3IN0xiLUmJOBoByteNVTF3W5bqyVpWizGJCgP6W_UoodTBeDKRmPXhAp7Gm3U7bMKD_tI=&originalReferer=&sessionRedirect=https%3A%2F%2Fwww.linkedin.com%2Fcompany%2Fidc%2F

https://consent.youtube.com/ml?continue=https://www.youtube.com/channel/UCpC5zQ9_aahVgIB4q9LaC0g&gl=PT&hl=pt-PT&pc=yt&uxe=23983172&src=1

https://www.facebook.com/IDCResearch

https://blogs.idc.com/

Thank You!

Date post:	25-Oct-2021
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Portugal, the best place

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